Insurance policies allow consumers to protect against the loss of life or property. For example, a person purchases insurance to cover loss of or damage to his or her automobile. In exchange for the payment of insurance premiums to an insurance provider, the provider agrees to compensate the policy holder in the event a loss or damage to the covered property. In some cases, the insurance provider pays to have the property repaired, such as in the case where an automobile is damaged in an accident. In other cases, the insurance provider determines that the accident results in a total loss. In such cases, the property cannot be economically repaired and the insurance provider compensates the insured for this loss. These insurance claims are terms “total loss claims.”
In the event of a total loss, an insured individual likely will need to replace the lost property. For example, following an automobile accident that results in the total loss claim, the insured will likely need to purchase a replacement automobile. Typically, the amount of compensation received from an insurance provider in response to the total loss claim is less than the cost to replace the lost property. For example, a five-year-old automobile may be worth $10,000 while a new automobile of the same make and model may cost $25,000. If the five-year-old automobile suffers a total loss event, the insurance provider would typically pay the customer $10,000, less any applicable deductible. If the customer wants to replace the lost property with a new car, he or she would need $15,000 more to pay for the new car. Often, a customer would take out a loan to pay this difference. Insurance providers are positioned to provide loan services to the insured in the event of a total loss claim. In response to servicing the claim, the insurance provider can offer the customer loan products that can be used to replace the lost property. Such a loan is referred to herein as a property replacement loan. Given that a customer may need to replace the property as soon as possible, how quickly a loan offer can be provided to the customer is critical in securing that loan business. One initial step in many loan processes is to pre-approve or prequalify a customer for a certain loan. This prequalification uses limited data on the customer to determine, based on the customer's credit worthiness, if the customer would likely qualify for a specific loan product.
In order to provide loan prequalification and loan offers to a customer in response to a total loss event, an insurance provider may have a relationship with one or more financial institutions. In one case, the financial institution may be part of a larger company that includes both an insurance provider and a financial institution. This case may include the situation were a financial institution owns an insurance provider subsidiary or vice versa. In a second case, the insurance provider may have a business relationship with one or more financial institutions that are independent of the insurance provider, where the business relationship includes the financial institution providing loans to customer's of the insurance provider that have suffered a total loss event. In a third case, a financial institution may establish a relationship with one or more insurance providers for the purpose of receiving indications of total loss events so as to pursue those loan opportunities.
Even if the customer has already secured a loan to replace the property, the insurance provider may still want to offer a property replacement loan to the customer. That is, the offered loan may provide more favorable terms than the property replacement loan secured by the customer, such that the customer would take the new loan offer and pay off the loan previously obtained by the customer. For example, the customer could have secured financing for a new car through an automobile dealership where the customer purchased a replacement vehicle after a total loss event. The customer could still benefit from a loan with better financial terms, such that the customer would refinance the vehicle loan.
What is needed is an automated system and method for providing loan services to an insurance customer in the event of a total loss claim, including automating the prequalification process for a property replacement loan. By automating the process, the system and method achieve one of the goals of this solution—to quickly provide a pre-approved loan offer to a customer following a total loss event.